The National Association of REALTOR's® Internet Display Policy was approved by its Board of Directors on May 22, 2000, but not in time to save one of local member boards from an embarrassing lawsuit that shined an unpleasant spotlight on MLS and Realtor Associations and how they use and profit from their listings databases.

In March, 2000, the Austin Board of REALTORS® and its MLS partner, Austin/Central Texas Realty Information Service, filed suit against one of its newest members eRealty, a dotcom-based real estate brokerage, for publishing the board's MLS listings on its intranet. This was an infringement of the copyright to the MLS data, alleged the plaintiffs. An injunction was issued by U.S. District Judge James R. Nowlin allowing eRealty to continue posting the listings on its site while the case proceeded. If the injunction was a harbinger of judicial rulings to come, ABoR and the MLS partner could well lose the suit to eRealty.

eRealty was willing to risk a legal precedent being set, but others were not so anxious. The climate was already beginning to grow cloudy for MLS organizations. Practices such as allowing partner dotcoms including Realtor.com, HomeAdvisor.com, HomeSeekers and others to post the database of listings free of charge or for payment, while restricting its own members from doing so, bred resentment from smaller individual brokers and agents across the country, who were looking for a way to harness the power the Internet for themselves. Many MLS organizations and large brokers benefited with lucrative stock options to share their listings with these aggregators. Some agents fought back by framing Realtor.com listings, and were sternly warned by the company to cease and desist.

It was just a matter of time before the situation came to a head, and someone ended up in court.

The NAR had its hands full on another front - making sure that Realtor.com and Homestore.com continued its march to profitability. While the very listings that were pumping up the valuation of Homestore.com and other stock market hopefuls, Realtors were being sold Web sites and lead generation tools which attached to the very listings they weren't allowed to post on their own Web sites. Realtor sentiment began to turn against Realtor.com particularly, as list-servs® and online communities posted numerous complaints by agents that they had been sold down the river by their own trade organization. Web site subscriptions atrophied at Realtor.com, according to one insider, a regional sales manager who admitted that he was asked in seminars more times than he could count, "Why can Realtor.com have our listings on their Web site, but we can't have our MLS listings on the Web site you want to sell us?" His glum response to this reporter, "We could sell many more Web sites if we could only frame the listings. We could sell framed listings all day long."

NAR to the Rescue

The NAR took the wind out of ABoR's lawsuit by establishing guidelines for MLS organizations to follow regarding use of listings on the Internet by members. On August 16th, the ABoR and ACTRIS voted to adopt the NAR's new Internet Display Policy immediately.

ABoR president Diane Kennedy said, "This is the next stage in the evolution of the MLS as the primary means of enhancing cooperation between REALTORS® to facilitate the purchase and sale of property. IDP gives MLS Participants the tool they need to display each other's listings on their own Internet Web sites. Under IDP, brokers consent to the display of each other's listings on the Internet."

NAR's Internet Display Policy Statement

"Associations of REALTORS and their Multiple Listing Services are encouraged to immediately, and must by January 1, 2002, enable MLS participants to display of Participants' public Web sites aggregated MLS active listing information through, at Participant's options, either downloading and placing the data on Participants' public access Web sites or by framing such information on the MLS or association public access Web site (if such a site is available) subject to the requirements of state law and regulation."

"Unless state law requires prior written consent from listing brokers, listing brokers' consent for such display is presumed unless a listing broker affirmatively notifies the MLS that the listing broker refuses to permit display (either on a blanket or on a listing-by-listing basis.) If a Participant refuses on a blanket basis to permit the display of that Participant's listings, then that Participant may not download or frame the aggregated MLS data of other Participants."

The statement had the desired effect. Yesterday, the Austin Board of REALTORS® and eRealty.com both expressed relief when U.S. District Judge James R. Nowlin dissolved the court's preliminary injunction.

David Foster, president of the Austin Board of Realtors, said he believes that

Realty Times Interacitve Post your questions and/or comments about this article. Click Here

recent changes in ABoR’s policy regarding access to and use of its Multiple Listing Service (MLS) – the focus of the suit – should bring the litigation to an end, just as it led to a lifting of the injunction.

With its Internet Display Policy statement, the NAR not only came to ABoR's rescue - it also paved the way for Realtor.com to get its wish, a way to frame and sell listings to participating agents and give them what the industry has known all along is the main reason four out of ten buyers flock to the Web - to view listings.

Although nothing has been announced to this effect, Realtor.com and other aggregators may be busily creating marketing tools associated with aggregated listings that can be resold to agents who want to have listings on their Web sites, courtesy of their MLSs. The aggregators already take the Realtor-centric data and re-package it for consumer consumption. Why not do the same for agents' specifications? HomeSeekers already pioneered the concept with its innovative Citynet feature in which participating MLS databases are routed through agent Web pages with the listing brokers information minimized, but clearly visible, at the end of the listing. Citynet makes buyers' agents out of any agent! And whose on the Internet? Buyers.

The IDP statement could be the best thing that ever happened to online marketing for REALTORS, an initiative that results in wins for everybody. The MLSs stay out of court, agents get listings on their sites, and the aggregators and the MLSs get a new revenue stream. At the top of the congratulatory heap is the NAR, which has come off looking as wise as Solomon himself.

The fly in the ointment

There's just one little problem. Everybody's happy except eRealty. With the removal of the injunction, ABoR moved to dismiss the case. But, the suit is continuing to move forward, not because eRealty wants it to, but because the whole conflict raised more questions than were answered by the NAR's IDP statement.

eRealty filed an opposition to ABoR's motion, arguing that the new NAR policy does not apply to eRealty's Web site which it contends is not "public." In addition, other issues need to be determined such as whether the property address should be part of the IDP or what service fees ABoR will charge for providing the MLS in alternative formats.

Foster said he is surprised eRealty still wants the case to go forward given the court’s declaration that, "Simply put, eRealty is no longer faced with a rule that prohibits its method of doing business. On the contrary, ABOR members are now specifically authorized to publish MLS data via their websites."

Chris Heagerty, eRealty's Austin director counters, "We are consulting with our attorneys regarding the suit after yesterday's development. The reason the judge did not dismiss the suit is that there are still some issues that need to be settled. One is a resolution whether eRealty operates a private or public Web site. The other issue is whether the NAR rule is anti-competitive in that it allows the members not to share their listings on a Web site.

"We need to consult and see the implications," says Heagerty. "The best possible outcome is that we continue doing business the way we are. Another is that it is quite possible that we could settle through mediation and that is probably everybody's hope. From the beginning we never wanted to be on the opposite side from the board."

The worst case scenario? "That the suit continues, and some kind of precedent is set," says Heagerty. "I believe we will have an answer by September 27 on how we will proceed.

Did the NAR IDP have anything to do with the suit? "What I think is that the NAR needed an Internet display policy and they were slow putting it into place," speculates Heagerty. "And when the ABOR board allowed us to come into the market and then put in a new rule that we couldn't do business, NAR didn't have a policy in place to guide the local boards about how to handle the display of listings on the Internet. I think the lawsuit motivated NAR to put in place the policy so local boards knew how to respond."

The ABoR hopes it doesn't' come to that. "Now that we have changed our policy regarding the use of this information, making it available for all of our members to post on their web sites, we are dropping all of our claims in this matter and see no reason why the case can’t be dismissed or settled," Foster said.

Published: September 15, 2000

Use of this article without permission is a violation of federal copyright laws.